Educational Dollars Down The Drain

November 28, 2000

In 1983, the National Commission on Excellence in Education released its report, "A Nation at Risk," that showed American children lagging behind in education. Since then, the teacher unions have continually asked for more money to solve the educational crisis. However, the relation between dollars and units of educational output is dubious.

The period of declining test scores, from the early 1960s through the early 1980s, coincided with a period when expenditures on education were rising in real terms -- that is, after adjusting for inflation.

Per-pupil expenditures rose 58 percent in real terms during the 1960s and 27 percent in the 1970s.

The lack of connection between dollars spent and education output persisted after "A Nation At Risk":

During the rest of the 1980s and the early 1990s spending rose 29 percent.

Simultaneously, American 13-year-olds finished last in a test comparing science and math skills internationally and SAT scores were still abysmally low.

American corporations have also noted the decline in education. For example,

American Telephone and Telegraph (AT&T) has reported that, on average, 115 out of 117 applicants (98.3 percent) flunk its employment exam.

Motorola found that 80 percent of its applicants fail its exam -- which evaluates English skills at the seventh grade level and math skills at the fifth grade level.

Historically speaking, additional money does not result in improved results.

Source: Jonathan Klick, "Do Dollars Make a Difference? The Relationship Between Expenditures and Test Scores in Pennsylvania's Public Schools," American Economist, Number 1, Spring 2000.